The federal government is getting back in the business of making flood plain maps after a 21-year hiatus - and that’s a step forward for Canada’s burgeoning flood insurance market, according to
Swiss Re.
Floodplain maps were once described to Insurance Business as “politically toxic” by Dr. Blair Feltmate, the University of Waterloo’s head of the
Intact Centre on Climate Adaptation, because million-dollar housing was built on highly flood-prone areas.
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Answering questions on the subject at the Canadian Insurance Outlook Breakfast in downtown Toronto was Swiss Re Canada’s president and CEO Veronica Scotti, joined by Moses Ojeisekhoba, Swiss Re’s CEO of reinsurance.
“Just because there’s no public data, doesn’t mean the problem doesn’t exist,” Scotti said. “My view is we need transparency, the analysis has to be very thoroughly done, made available so that there can be concerted actions.”
Ojeisekhoba made the point that, historically, it’s been low-income housing that’s built on flood plains and insurers should charge in relation to the risk while governments provide coverage of last resort like Flood Re does in the UK.
“If it’s a wealthy community and it’s built on a floodplain, as long as it’s mapped correctly the insurance industry should know that and should charge for it properly. It doesn’t matter if it’s wealthy or not wealthy, as long as you have accurate data, that’s the most important thing in my mind,” Ojeisekhoba said.
“You charge for it properly or you say this is a risk you can’t insure. It’s exactly what happened in the UK and other parts of the world: ultimately the industry gets to the point where they say, ‘we’re not going to insure’ and that’s where the concept of Flood Re comes in as a government backstop.”
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Scotti suggested flood-prevention solutions could create the right circumstances for insurance companies, post-flood map revelations.
“Let’s say we have a wealthy community we know to be flood-prone, what do you do?” she asked. “Throw away millions and millions? In an Austrian community, municipalities stepped in and instead of saying ‘OK we’re going to get flooded every three years, we’re going to have all sorts of problems’ they built removable walls and it did not infringe on the externalities,” Scotti said.
“This is not technology but smart engineering and they built it because the community was effectively below a water bank. So when they knew the flood was coming, they erected the wall which contains water from overflowing and flooding the entire community. It works, and when the season is dry, you take it away.
“It doesn’t have to be ‘you’re going to suffer, there are compromises.’ What we really want is a discussion about how we go about it - we’re not dictating the way to do it.”
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